The merger between Barclays (or RBS) and ABN Amro is set to cost hundreds of jobs in the UK. When banks grow by acquisition, the pace of change frequently leaves a legacy of systems that do much the same thing but don’t interconnect and of people who perform essentially the same business processes but in incompatibly different ways. As a result, management teams often find it harder to consolidate and summarise everything that is going on in the bank, leading to duplication of costs, which makes it harder to flush out risks and increases the chance that there will be a failure of internal controls. The result may be a reduction in profit, share price and brand value, the complete opposite of what was intended.
The time of a merger or acquisition can be the perfect time to introduce an outsourcing model – establishing a relationship with an ITO outsourcing partner can definitely help at such a juncture. They will be in a position to provide an independent perspective i.e. they will not favour the system of one company over the other and will be able to select the best features from both. As part of a standard outsourcing contract, the supplier will also be prepared to sign up to cost reduction targets and business case benefits. Often in the case of a merger or acquisition the infrastructures are so different that it will require a completely fresh start.
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